Shares of CrowdStrike Holdings (NASDAQ: CRWD) stock tumbled in afternoon trading on the Nasdaq Monday after three separate Wall Street analysts all suddenly cut their price targets on the cybersecurity specialist.
Commenting on the company’s financial results, Burt Podbere, CrowdStrike’s chief financial officer, added, “CrowdStrike once again delivered exceptional results, maintained very high unit economics, drove leverage and generated strong operating and free cash flow as we expanded our leadership across the market from large enterprises to small businesses”.
“Given the growth drivers of our business, as well as our exceptional third-quarter performance and momentum into the fourth quarter, we are once again raising our guidance for the fiscal year 2022.”
Financial Highlights
Total revenue was $380.1 million, a 63% increase, compared to $232.5 million in the third quarter of fiscal 2021. Subscription revenue was $357.0 million, a 67% increase, compared to $213.5 million in the third quarter of fiscal 2021.
Annual Recurring Revenue (ARR) increased 67% year-over-year and grew to $1.51 billion as of October 31, 2021, of which $170.0 million was net new ARR added in the quarter. Net new ARR year-over-year growth accelerated to 46% on an as-reported basis and 55% on an organic basis.
Subscription Gross Margin: GAAP subscription gross margin was 76%, compared to 77% in the third quarter of fiscal 2021. Non-GAAP subscription gross margin was 79%, compared to 78% in the third quarter of fiscal 2021.
Income/Loss from Operations: GAAP loss from operations was $40.3 million, compared to $24.2 million in the third quarter of fiscal 2021. Non-GAAP income from operations was $50.7 million, compared to $18.9 million in the third quarter of fiscal 2021.
GAAP net loss attributable to CrowdStrike was $50.5 million, compared to $24.5 million in the third quarter of fiscal 2021.
Net cash generated from operations was $159.1 million, compared to $88.5 million in the third quarter of fiscal 2021. Free cash flow was $123.5 million, compared to $76.1 million in the third quarter of fiscal 2021.
Future Potential
CrowdStrike Holdings (NASDAQ: CRWD) is a pure-play on cybersecurity growth. The company is a leader in endpoint protection, threat intelligence, and cloud security. Its solutions are cloud-based, and nearly all of its revenue comes from subscription services, providing annual recurring revenue (ARR). As of the third quarter of 2022, CrowdStrike had 14,687 customers, up from only 450 in fiscal 2017.
Sales have grown right along with customers, and ARR in the third quarter of 2022 surpassed $1.5 billion. As shown below, this is 67% year-over-year growth. CrowdStrike reports a gross retention rate of over 97%, and a dollar-based net retention rate of over 120%, meaning that high growth is likely to continue.
Over the long term, the company shows tremendous signs of scalability, starting with its gross margin of 76% based on generally accepted accounting principles (GAAP). CrowdStrike may soon leverage its growth and reward long-term shareholders.
About CrowdStrike Holdings
CrowdStrike provides cloud-delivered endpoint and cloud workload protection. Leveraging artificial intelligence (AI), the CrowdStrike Falcon® platform protects customers against cyberattacks on endpoints on or off the network by offering visibility and protection across the enterprise.
